Manhattan condo sales jump to 2,957 ahead of 'mansion tax'

Business | 2 Jul 2019 1:11 pm

Home sales in Manhattan in New York City have  perked up in the second quarter from a prolonged slump, as buyers raced to close deals ahead of a July 1 tax increase on higher priced properties, Bloomberg reports.

Sales of co-ops and condos jumped by 12.5 percent in the three months ended June 30, marking the first time in seven quarters that deals climbed from the previous year, according to a report Tuesday by appraiser Miller Samuel and brokerage Douglas Elliman Real Estate.

The average price of the 2,957 apartments that changed hands set a record at US$1.22 million. But those gains are probably fleeting. The increase in sales was offset by a surge of listings -- to the most since early 2012, the firms said.

There were 7,558 apartments on the sales market at the end of June, a figure that’s 20 percent higher than the 10-year quarterly average.

“That’s why we can’t proclaim that we’re in recovery mode,” said Jonathan Miller, president of Miller Samuel. “There’s still some time in front of us before we’re going to see a stronger housing market.”

New York state’s revised “mansion tax” -- which took effect July 1 -- proved to be a powerful motivator to sell in a market where shoppers have been waiting for prices to fall. The tax, which previously applied a 1 percent levy to all homes that sold for more than US$1 million, now charges an increasingly higher rate to homes above US$2 million. The added closing costs -- ranging from 1.25 percent to 3.9 percent -- motivated sellers to lower prices now, for fear that buyers would demand further reductions after the new tax structure took effect. Fifty-four percent of homes that sold in the quarter did so below the asking price, according to Miller Samuel and Douglas Elliman.

Another 40 percent sold at the asking price, though many of those had been reduced earlier, Miller said. Combined, the number of homes selling at or below the price the seller was seeking was the greatest since the end of 2010.

“At all price points, all markets and locations, buyers want to negotiate. They want to feel like they got a good deal,” said Garrett Derderian, managing director of market analysis at brokerage Core. “No one wants to be caught at the top paying a premium when we still have so much inventory coming online and there’s still a question as to how long it will take for all this high-priced inventory to be absorbed.”

The average discount on homes that closed in the quarter averaged 9 percent, Core said in its report. Thirty eight percent of homes that found buyers in the quarter took over 180 days to sell, a sign that owners of lingering properties had become more motivated.-Photo: Mansion Global 

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